Activists See Positive Signs at Wal-Mart

Although they were unsuccessful, activists who tried to get Wal-Mart to disclose the breakdown of its stock option grants according to race and gender say that they left the retailer’s annual meeting last month feeling somewhat hopeful.

At the June 3 meeting, Martha Burke, chair of the National Council of Women’s Organizations, spoke in favor of a resolution filed by members of Responsible Wealth, a group of socially responsible investors who represent the wealthiest 5 percent of Americans.

With only three minutes to speak to Wal-Mart’s management and the 20,000 meeting attendees, Burke stressed how important it was that Wal-Mart, as the biggest company in the country, takes a leadership position in disclosing how it distributes its stock awards.

Burke says that if Wal-Mart had put more of an emphasis on disclosure in the past, it might have prevented the wave of class-action discrimination and wage lawsuits that have plagued the company. “If they had implemented internal disclosure of the pay rates by gender, they may have avoided some of that,” she says.

Institutional Shareholder Services, a Rockville, Maryland-based company that advises institutional investors on how to vote their proxies, supported Responsible Wealth’s call for disclosure. The company normally would not support such measures, senior analyst James Letsky says, but given Wal-Mart’s recent legal history, it believes such a move would be prudent.

In response to Wal-Mart’s announcement of its new board, Burke chastised the company for having only two women on its 14-member panel. Given that so many of its customers and employees are women, it would make sense for the company to address this, she says.

Although the resolution failed, having received only a 14.3 percent approval rate from shareholders, Burke and Scott Klinger, co-director of Responsible Wealth, say they are optimistic. There were signs during the meeting that Wal-Mart may be receptive to discussions on these issues, Burke says.

For one thing, Wal-Mart CEO Lee Scott and chairman Rob Walton both personally greeted her, Burke says. She was pleasantly surprised that Walton responded to her remarks directly by saying that the company cared about these issues. “He seemed to be saying, ‘We hear what you are saying,’ ” Burke says.

Klinger, who was sitting next to a Wal-Mart employment attorney at the meeting, says he spoke to her about how Responsible Wealth filed a similar resolution with Coca-Cola in 2003 regarding disclosure of stock option grants. In response, Coca-Cola informed the group that the company internally conducts an analysis of stock option grants to ensure that there is no bias, and while it does not disclose its findings, it deals with them privately.

Doug Daft, former CEO and chairman of Coca Cola, joined Wal-Mart’s board of directors this year. “I’m hopeful that Wal-Mart might do the same,” Klinger says. “Even if they didn’t disclose it, it would still be a step in the right direction.”

A Wal-Mart spokesman says the company has no plans to disclose how it grants options.